FivePoint and Blue Owl Launch $1.7B Deal

Building on the success of its recent acquisition of Hearthstone Residential Holdings, developer Five Point Holdings is partnering with Blue Owl Capital to potentially buy up to $1.7 billion of land in the U.S. housing market. 

In exchange, the institutional partner has the option to buy FivePoint shares at a fixed price. 

The Irvine-based developer of Great Park Neighborhoods is working with the investment firm to expand a specialized real estate service known as “land banking.“ 

“This transaction represents an important milestone for Hearthstone and for FivePoint,” said Dan Hedigan, president and chief executive officer of FivePoint, in a news release. 

“Following our acquisition of the Hearthstone platform mid-last year, this new partnership marks a critical first step in scaling the land banking business…. This new agreement with Blue Owl positions Hearthstone to pursue a broader set of growth opportunities and further solidify its role as a leading residential land banking platform.” 

Hearthstone Acquisition 

Mark Porath, who is based in Calabasas, founded Hearthstone in 1992, sold a 75% stake last June to FivePoint for $59.25 million; Porath owns the remaining 25% of the company. 

Hearthstone specializes in managing institutional capital for residential for-sale housing in markets nationwide. 

At that time, Hearthstone managed over $2.6 billion in assets and helped fund more than 173,000 homes and lots, totaling $21 billion. 

CEO Porath will lead the new initiative with Blue Owl, Hedigan said during FivePoint’s most recent earnings call. 

Blue Owl, which provides businesses with private capital solutions, has more than $307 billion in assets under management and a market cap of $16.8 billion (NYSE: OWL). 

Land Banking 

FivePoint is known for developing master-planned communities in Irvine, Valencia and San Francisco. 

The partnership with Blue Owl comes as the Irvine developer continues its expansion outside of masterplan development. 

Instead of only buying, developing and selling its own land, the company now manages real estate for other homebuilders and institutional partners. It earns management fees for its expertise while using others’ funds to finance the deals. 

Land banking is a real estate strategy where a company buys and holds undeveloped land to sell or develop in the future. 

In this approach, Hearthstone will use Blue Owl Capital to buy land, while FivePoint handles the approval, entitlement and development process. This layaway-style approach allows homebuilders to secure future residential lots without using their own money for long-term land investments. 

Hearthstone holds the land until builders are ready to start construction. 

Hedigan said that since the acquisition, “FivePoint and Hearthstone teams hit the ground running.” 

“At closing, Hearthstone had approximately $2.6 billion of assets under management and that figure has since grown to approximately $3.4 billion,” said Hedigan. “Additionally, we anticipate securing $300 million to $500 million of newly originated capital commitments in the first quarter.” 

Hedigan added that within five months of the acquisition, Hearthstone earned $11.8 million in management fees and contributed $3.5 million in net income to the company’s results. 

The land banking partnership with Blue Owl Capital includes an incentive plan. 

According to a regulatory filing, Blue Owl earns equity warrants in FivePoint only after hitting capital contribution targets, starting at $500 million and rising to $1.7 billion. 

Once capital milestones are met, Blue Owl-managed funds will get warrants to buy FivePoint shares at $7 each. At press time, the stock traded at $5.54 with an $815 million market cap (NYSE: FPH). 

Irvine’s High Land Cost 

According to FivePoint’s fourth quarter earnings report on Jan. 29, its company, Great Park Ventures, sold 187 homesites on nearly 20 acres of land for $181.5 million. 

Irvine averaged about $9.2 million per acre; although this price is below the peak price of around $12 million per acre, it’s still one of the highest residential land values in the country. 

Builders paid about $970,000 per lot—nearly $1 million before construction even begins. 

Despite high mortgage rates and affordability concerns, builder demand remains strong, the company said. 

In 2025, builders purchased 920 homesites across 13 programs at the Great Park, according to FivePoint officials.